Global large-cap energy equipment maker, National Oilwell Varco Inc. (NOV) announced that the spin-off of its distribution business, NOW Inc., has received the approval to be listed on the NYSE. The new entity will be trading under the symbol DNOW.
National Oilwell stated that for every four shares of NOV, one share of the new entity will be issued to stockholders. Also, for any fractional share issue, the stockholder will receive a cash payment after the issue is sold in the open market.
The company stated that the new shares will be issued after the close of trade on May 30, to shareholders of record as of May 22.
Houston, TX-based National Oilwell is a world leader in the design, manufacture and sale of comprehensive systems, components, products and equipment used in oil and gas drilling and production worldwide.
The company has a healthy backlog, solid balance sheet and strength in international operations, particularly in the Middle East and Brazil that works in its favor. Moreover, National Oilwell beat estimates in the past three quarters.
However, with new competitors entering the market and drilling contractors reducing the capital expenditure, National Oilwell Varco has witnessed its new equipment package pricing fall around 10% from the levels achieved during the peak of 2007–2008. Moreover, oilfield service stocks are extremely volatile and the correlation of their movement with underlying business fundamentals is at times difficult to establish.
National Oilwell, which ranks ahead of Cameron International Corp. (CAM) as the largest U.S. maker of oilfield equipment, currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked players from the oilfield machinery and equipment industry such as Matrix Service Company (MTRX) and USA Compression Partners, LP (USAC). While Matrix sports a Zacks Rank #1 (Strong Buy), USA Compression holds a Zacks Rank #2 (Buy).